Hims & Hers Health (NYSE:HIMS) saw its shares surge by 7% today after the FDA announced that it would reconsider its decision to limit compounded weight-loss drugs, following a lawsuit from the Outsourcing Facilities Association. This legal action, filed on October 7, challenged the FDA's removal of Eli Lilly's tirzepatide, sold as Mounjaro and Zepbound, from the drug shortage list. The FDA has now agreed to review the decision, allowing compounding pharmacies, like those supplying Hims & Hers, to continue providing their versions of semaglutide during the review process. This regulatory update has fueled investor optimism, pushing Hims & Hers stock to $20, more than doubling its value so far this year.

Earlier in the month, on October 3, Hims & Hers faced a significant market setback when the FDA announced that Eli Lilly's tirzepatide was no longer in shortage, leading to a nearly 10% drop in stock. The decision raised concerns about potential restrictions on compounded versions of the drug, which are sold at lower prices and have been a key offering for Hims & Hers in the weight-loss space. While Eli Lilly's tirzepatide supply has stabilized, compounded semaglutide, another GLP-1 drug offered by Hims & Hers, remains in shortage, helping the telehealth company maintain demand for its weight-loss medications despite the shifting regulatory landscape.

With the FDA now reconsidering its stance, Hims & Hers stands to benefit from continued access to the compounded versions of tirzepatide and semaglutide, positioning the company as a competitive player in the crowded weight-loss market. Offering its injectable weight-loss treatments for as low as $199 per month, Hims & Hers has gained traction among consumers seeking affordable alternatives. As the regulatory review progresses, the company's future growth will depend on the outcome of the FDA's decision and the sustained demand for its affordable compounded medications.

This article first appeared on GuruFocus.